No tech yet to link Aadhaar to PoS units

Electronic payments at merchant establishments have been soaring for the past three years as savvy consumers take to plastic. But that industry may be headed for a crash as merchants selling the so called Point of Sale terminals are set to miss RBI's deadline to link Aadhaar numbers as no such technology is available as of now.

Although the regulator has said that these machines may have to be linked, it is not clear whether it should be linked just to the Aadhaar number, or biometrics or something else, said industry experts.

"There is no clarity as to how the transaction will flow, if the customer will need to swipe his card, punch the Aadhaar number or whether the biometrics will act as the second factor of authentication. Unless these intricacies are cleared, PoS manufacturers cannot develop Aadhaar-enabled PoS machines within the mentioned deadline," said Manish Patel, founder of Mswipe which manufactures mobile PoS terminals.

The RBI, in a notification issued on September 29, made it mandatory for all banks to install new PoS terminals with means for Aadhaar-based biometric authentication to facilitate secure transactions. Given that there are millions of such machines and such a diktat hasn't been given by any major regulator across the world, makers of those machines have not evolved the technology.

Yet another factor is the availability of space. "If biometric details need to be captured, then the size of the data would shoot up to 700kb from 20kb presently. PoS terminals working on 2G internet speeds and dial-up connections will not be able to manage such heavy data," said Patel.

Many players are raising questions on the level of preparation for the financial services industry to be able to handle the change.

"I believe that a pilot needs to be done which can help the system to slowly gear up to the big change. A terminal works in tandem with a bank, the payments switch as well as the manufacturer. I believe it requires readiness from all levels," said Lokvir Kapoor, chief executive officer at PineLabs which also manufactures point of sales terminals.

The Aadhaar Hurdle

RBI Notification: It is mandatory for all banks to install new PoS terminals with means for Aadhaar-based biometric authentication